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Germany has started a campaign calling for China’s diversification, with Chancellor Angela Merkel and her economy minister suggesting that companies expand their Asian market.
This comes days after Merkel canceled a meeting with 26 other European Union leaders to discuss China’s future policies, citing the coronavirus pandemic and Brexit’s most urgent priority.
Germany, the EU’s largest economy, recently launched its Indo-Pacific policy, which officials said was aimed at encouraging companies to explore destinations in the region other than China.
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Beijing has been eager to keep the EU on its side as its economic and geopolitical competition with the United States intensifies. But it is unclear whether he will agree to increased market access demanded by the EU amid talks for an investment treaty, scheduled to be completed this year.
Other European leaders, including French President Emmanuel Macron, have also called for less dependence on China, but generally in the context of the medical supply chain, rather than full diversification, as Merkel suggested.
At an event organized by the German Asia-Pacific Business Conference on Monday, Merkel urged German companies to diversify and win new markets in the Asia-Pacific region. The government will continue its efforts to improve framework conditions, he said.
Currently, about three-quarters of Germany’s Asian exports go to East Asia, and half of them go to China alone, Merkel said.
Economy Minister Peter Altmaier, at the same conference on Monday, said that German companies should diversify to Asian markets beyond China to be less dependent on unique supply chains, which the pandemic has shown to be vulnerable to the interruption.
He alluded to bottlenecks in the supply of medical equipment to the German market in the spring. “Naturally, we want to diversify our supply chains,” said the minister.
Singapore and South Korea could offer promising opportunities as they handled the coronavirus crisis well and regained their economic strength early on, he said.
A German official recently told the Post: “Germany is not aiming to disassociate itself from China. Rather, we would like to get a bigger pie in Asia as we are currently very dependent on China when it comes to the Asian market.”
While China’s economic recovery accelerated in the third quarter to 4.9 percent, overall growth was weaker than expected, suggesting lingering risks. Still, the International Monetary Fund expects the country to be the only major economy to post economic growth this year.
Germany’s economy is expected to contract around 5.4 percent this year.
Additional information from Reuters
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